China Picks UAE as Regional Production Hub for Sinopharm Shot

(Bloomberg) --

The United Arab Emirates will become the first country to produce China’s Sinopharm vaccine abroad in a deal that deepens Beijing’s influence in the Arab Gulf, long a bastion of U.S. power.

Gulf Pharmaceutical Industries PSC said on Sunday it signed a contract to start manufacturing the vaccine from April, making UAE the first Gulf state to set up a coronavirus vaccine production facility and boosting its efforts to become a supply hub to the Middle East and beyond.

The agreement with Abu Dhabi’s G42 Medications Trading didn’t include details on how many doses will be manufactured. G42, which describes itself as an artificial intelligence and cloud computing firm, had helped roll out trials of the Sinopharm vaccine in the country.

The state-backed Sinopharm vaccine was approved in the UAE last year after local late-stage trials showed it was 86% effective in preventing infections. The country has since overseen one of the world’s fastest inoculation drives, with most people having received the Chinese vaccine.

The deal will bolster UAE’s ties with Beijing, which have strengthened since 2018 when President Xi Jinping visited Abu Dhabi and agreed to upgrade relations to China’s highest level. Foreign Minister Wang Yi, currently in the UAE for an official visit, said on Saturday the countries will expedite bilateral production of vaccines.

“It is a really clear signal that the UAE is China’s most trusted partner in the Middle East and it creates linkages with other countries in the region” said Jonathan Fulton, assistant professor at Abu Dhabi’s Zayed University and a specialist in China-Gulf relations.

Beijing has been building stronger Middle East links as part of its Belt and Road Initiative. On Saturday, it signed a 25-year deal with Iran outlining economic, political and trade relations. That poses an immediate challenge to U.S. President Joe Biden’s administration as it seeks leverage with Tehran over resurrecting the 2015 nuclear deal.

Fulton described the Iran deal as aspirational. “The UAE relationship is not aspirational, they are deep into the implementation of it,” he said. “This shows the depth and the breadth of the involvement.”

The UAE is keen to expand its influence in China and other fast-growing markets in Asia. China was the UAE’s second-largest trading partner in 2019 after India, with $55.9 billion in total trade -- more than double what it had with the U.S. that year, according to data compiled by Bloomberg.

Supply Hub

While the UAE has approved vaccines from Pfizer Inc. and AstraZeneca Plc as well as Russia’s Sputnik V, its inoculation program hinged on Sinopharm given early availability and the potential to produce the shots locally -- key to the UAE’s aspirations of becoming a supply hub.

The Sinopharm vaccine can be transported and stored at normal refrigerated temperatures, making it a candidate for the developing world. The company’s annual production capacity for Covid vaccines is set to reach 3 billion doses, its chairman Yu Qingming said this month, without giving a time frame.

In November, Abu Dhabi launched the Hope Consortium, a logistics grouping with the capacity to distribute more than six billion vaccine doses. The consortium includes the emirate’s Department of Health, Etihad Cargo, Abu Dhabi Ports Group, Rafed and SkyCell.

In neighboring Dubai, companies including Emirates airline, ports operator DP World and Dubai Airports have also formed an alliance to move two billion doses of vaccines around the world this year, focusing on emerging markets.

©2021 Bloomberg L.P.